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Deutsche Considers Commerzbank Merger To Improve Performance

Germany’s Commerzbank is no stranger to takeover talks. Last year, Italy’s largest bank, UniCredit, was reported to have interest in merging with the German financial institution.

Now, Commerzbank could be the takeover target of a fellow bank closer to home.

Reports in Bloomberg said Deutsche Bank is said to be considering a merger with the nation’s No. 2 FI. Reports said the strategy would aim to combine two struggling banks into a unified, thriving institution.

Deutsche Bank Chairman Paul Achleitner has reportedly already held talks with shareholders and government officials about a possible deal, reports said, citing unnamed sources. But the publication emphasized that any deal would not be in the immediate future.

Achleitner is facing increasing pressure to address what he described as a “vicious circle” the bank has endured.

But Roy Smith, emeritus professor of management practice at the New York University Stern School of Business, told Bloomberg that a combination of the banks could be “like tying two drunks together to give them more stability.”

Deutsche Bank shares fell 1.5 percent in Germany following news of a possible deal. Earlier this month, the bank saw record stock slumps, and this year shares are down 40 percent. Deutsche Bank’s market capitalization currently stands at about $23 billion; Commerzbank shares similarly declined this year, with a current value at about $13.8 billion.

Reports noted that, while sources said a merger with Commerzbank was Achleitner’s idea, the bank said investors were the first to propose the deal.

“The chairman is asked constantly about this matter,” said Deutsche Bank spokesperson Joerg Eigendorf. “His answer is always the same: ‘All the pro and contra arguments can be read in analyst reports and the media. So what do you think?'”

In April, Deutsche posted its Q1 results, disappointing investors and coinciding with plans for “painful but regrettably unavoidable” job cuts, according to the bank’s CEO Christian Sewing.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.